Micro Unit 1 Summary- Basic Economic Concepts (Old Version)

This video provides a comprehensive overview of Unit 1 in microeconomics, covering key concepts such as scarcity, opportunity cost, and trade-offs. It explains economic systems, the invisible hand, and the production possibilities curve. The video also delves into specialization, trade, and comparative advantage, concluding with an introduction to the circular flow model.

What is the primary focus of microeconomics?

• The study of government policies

• The study of international trade

• The study of small economic units

• The study of large economic systems

Which economic system is characterized by government ownership of resources?

• Centrally planned economy

• Mixed economy

• Free market economy

• Traditional economy

What is the role of the invisible hand in a free market economy?

• To control monopolies

• To guide resources to their most valued use

• To ensure equal distribution of resources

• To regulate government policies

What does a mixed economy combine?

• Micro and macroeconomic policies

• Centrally planned and free market economies

• Traditional and command economies

• Domestic and international trade

What does a point inside the production possibilities curve represent?

• Maximum production capacity

• Unattainable production level

• Inefficient use of resources

• Efficient use of resources

What is the law of increasing opportunity cost?

• Opportunity cost is unrelated to production

• Opportunity cost remains constant as production increases

• Opportunity cost decreases as production increases

• Opportunity cost increases as production increases

What is absolute advantage?

• The ability to produce more output with fewer resources

• The ability to consume more goods

• The ability to produce at a lower opportunity cost

• The ability to trade more efficiently

Why should countries specialize in trade?

• To eliminate opportunity costs

• To benefit from comparative advantage

• To reduce their production possibilities

• To increase their absolute advantage

What is the purpose of terms of trade?

• To limit the amount of goods traded

• To establish conditions that benefit both trading countries

• To ensure one country benefits more than the other

• To increase tariffs on imported goods

In the circular flow model, what do households supply?

• Goods and services

• Resources

• Government policies

• Foreign exchange